All You Need to Know about Bad Credit Mortgages and How to Apply for One

In general, mortgage lenders look at three important factors when they decide whether or not to approve a mortgage application. First, there is the balance between the income and expenses of the applicant – can he or she afford it? Secondly, there’s the deposit; is there one, and how much? Thirdly, mortgage lenders do a background check to investigate the credit rating of the applicant.

If one of the three turns out to be problematic, it may be grounds for denial. However, for those who know where to look, it may still be possible – especially if the main issue is a bad credit rating. Have you had trouble with your finances in the past? Here’s all you need to know about bed credit mortgages and how to apply for one.

What’s a bad credit mortgage?

Actually, a bad credit mortgage is a misnomer, and doesn’t really exist. The ‘bad credit mortgage’ is the same as any other mortgage, only that certain issues are taken into consideration and different conditions are applied. People in the industry prefer the terms ‘sub-prime’ or ‘adverse credit’ mortgages. They are mortgages given to people who are considered a higher risk as an investment due to a poor credit rating.

Your credit score

Your credit score is important and makes up a big part of the eligibility criteria of lenders. Issues that can adversely affect your credit rating include:

Having been declared bankrupt

Having a debt management plan

Missed payments or late payments regarding credit cards, mortgage payments, or other forms of loans

Having county court judgments against you

The solution

You may still be able to get a mortgage, and this can be done by applying to mortgage lenders who judge on the basis of individual circumstances.

How to get a mortgage

There are different kinds of mortgages available – for example fixed, discounted rates, variable, and so on. The best way to go about your application is to first seek a reputable mortgage lender that accepts ‘sub-prime’ candidates.

Of course, it’s always better to have a good credit rating, and even if you have a less-than-desirable credit report right now, there are still things you can do to improve it. If there are any bills still unpaid, pay them on time and in full. Get on the electoral role, and close credit accounts that you don’t use. It’s important that you check your own credit report very carefully – there may be some mistakes made which have to be corrected as soon as possible.

AS A MORTGAGE IS SECURED AGAINST YOUR HOME OR PROPERTY, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.